Direct injections of money into the economy can have a number of effects. The sellers of the assets have more money so may go out and spend it. That will help to boost growth. Or like in reality they may buy other assets instead, such as shares (share buy back policies) or company bonds which we have seen in past, the corporations have money ,they are already sitting on a lot of cash.
By buying MBS,AAA Corporate debt, long term treasury securities the FED’s anticipation of reenergizing economic activities needs to be closely watched
Thursday, March 3, 2011
Thursday, February 10, 2011
Freshwater Vs Saltwater Economists
http://www.nytimes.com/1988/07/23/business/fresh-water-economists-gain.html
While reading this article , I was remembering the East Coast–West Coast hip hop rivalry which resonated at some level with the cotemporary different schools of thoughts of Economists pointed out in this article.
By far the biggest difference between the 2 school of thoughts is the explanation of recessions and associated issues like persistence of recessions.
The equilibrium model from the freshwater economists advocate that economy is self stabilizing and will return to equilibrium in its due course and that there is inherently no need of any policy interventions to achieve full employment
The general malaise around economic conditions cannot be quantified by the hypothesis of equilibrium model and we have to be mindful that any economic model needs calibration and fine tuning
While reading this article , I was remembering the East Coast–West Coast hip hop rivalry which resonated at some level with the cotemporary different schools of thoughts of Economists pointed out in this article.
By far the biggest difference between the 2 school of thoughts is the explanation of recessions and associated issues like persistence of recessions.
The equilibrium model from the freshwater economists advocate that economy is self stabilizing and will return to equilibrium in its due course and that there is inherently no need of any policy interventions to achieve full employment
The general malaise around economic conditions cannot be quantified by the hypothesis of equilibrium model and we have to be mindful that any economic model needs calibration and fine tuning
Sunday, December 5, 2010
Fighting inflation
Fighting inflation requires government to take unpopular actions like reducing spending or raising taxes, while traditional fiscal policy solutions to fighting unemployment tend to be more popular since they require increasing spending or cutting taxes.
We have seen that unemployment can be kick started by increased spending.
Increased spending by government can be done by starting big projects.
There is no way any govt can force private sector to hire more people , Unemployment has to be dealt with fiscal policies now in the present political conditions of gridlocks and filibusters its going to be really tough to implement.
We should have the unemployment crisis taken care by government first and then the private sector can take it forward.
We have seen that unemployment can be kick started by increased spending.
Increased spending by government can be done by starting big projects.
There is no way any govt can force private sector to hire more people , Unemployment has to be dealt with fiscal policies now in the present political conditions of gridlocks and filibusters its going to be really tough to implement.
We should have the unemployment crisis taken care by government first and then the private sector can take it forward.
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